New figures show that Japanese business confidence has reached its highest level in two years, as the world's number two economy continues to recover from its worst slump in decades.
An index of sentiment among major manufacturers rose for a fifth straight quarter to one point in June from minus 14 in March. This is according to the Bank of Japan's closely watched Tankan survey of more than 11,000 firms.
The reading means that optimists outweigh pessimists among major manufacturers in terms of their view of Japan's economic climate. This is the first time this has happened since June 2008. The Tankan figure was also better than analysts had expected.
The June survey signals an increasingly upbeat mood, with companies predicting surging profits while planning to raise spending on plants and equipment. This is likely to boost an economy struggling for sustainable growth.
Exports have driven the country's recovery from recession but recent data show that the domestic picture remains weak, with unemployment surprising economists by edging higher in May to 5.2%.
Crippling deflation and weak domestic demand continue to weigh on growth as consumers defer purchases in the hope of further price falls.
Separate figures showed that manufacturing activity in China slowed in June, suggesting that government efforts to cool the fast-growing economy are working.
The HSBC China Manufacturing PMI, or purchasing managers' index, fell to 50.4 last month from 52.7 in May, the bank said. A reading above 50 means the sector is expanding, while below 50 indicates an overall decline.
